AFSB 153 Sample Exam Questions and
Answers 100% Solved | Rated A+
The surety relationship includes all of the following parties, EXCEPT:
a. Surety
b. Fiduciary
c. Obligee
d. Principal - ✔✔b. Fiduciary
All of the following are recognized bond terms, EXCEPT:
a. Noncancelable (open term)
b. Definite term
c. Continuous term
d. Revolving term - ✔✔d. Revolving term
In addition to assisting bond applicants to complete applications and
indemnity agreements, some surety producers
a. Investigate commercial surety bond losses.
b. Design commercial surety bond forms.
c. Have underwriting authority to execute bonds.
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,d. Investigate applicants' credit reports, financial statements, and loss
experience. - ✔✔c. Have underwriting authority to execute bonds
A surety would use an indemnity agreement rather than a bond application
when
a. The underwriter is concerned that the surety faces a greater-than-
average risk of loss.
b. Several subsidiaries of a corporation require a number of bonds.
c. A producer with power of attorney and underwriting authority executes a
bond.
d. The surety reuqires signed indmenity agreements for all bonds. - ✔✔b.
Several subsidiaries of a corporation require a number of bonds.
An underwriter determines the surety's ability to cancel a bond and the
period of subsequent liability by
a. Reviewing the bond form and the applicable laws.
b. Reading the SAA documentation for that particular class of bonds.
c. Studying court decisions in similar bond cases.
d. None of the above determines the surety's ability to cancel or the liaiblity
period. - ✔✔a. Reviewing the bond form and the applicable laws.
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,In addition to the amount of the expected loss and investigative expenses,
claim representatives should consider the following when setting reserves
on commercial surety bond losses:
a. Legislative loss reserve requirements.
b. Producer commissions.
c. Obligee's financial worth.
d. Payment of interest. - ✔✔d. Payment of interest.
Which one of the following SAA classifications of license and permit bonds
do sureties consider the most hazardous?
a. Compliance bond with third-party liability
b. Reclamation and environmental protection bonds
c. Forfeiture bonds
d. Merchandising and dealer bonds - ✔✔b. Reclamation and environmental
protection bonds
When should an underwriter require collateral for license and permit
bonds?
a. When the underwriter is certain that the principal will default on the bond
obligation
b. After the principal has defaulted on the bond obligation
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, c. When the principal presents a higher-than-average risk of default on the
bond obligation
d. When the principal fails to meet all underwriting requirements - ✔✔c.
When the principal presents a higher-than-average risk of default on the
bond obligation
When might a court interpret bond language to include lawyers' fees that
exceed the bond penalty when combined with other damages (excess
awards)?
a. Courts routinely allow lawyers' fees as excess awards when bond cases
are tried.
b. Bond language prohibits courts from ever allowing excess awards.
c. Courts often allow lawyers' fees as excess awards in bond claims
presented by damaged third parties.
d. Courts sometimes allow excess awards to punish a surety for bad faith
or unfair claim settlement practices. - ✔✔d. Courts sometimes allow excess
awards to punish a surety for bad faith or unfair claim settlement practices.
Packers and Stockyards Act bonds are designed to protect
a. Livestock sellers.
b. The public.
c. Packers and stockyard operations.
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Answers 100% Solved | Rated A+
The surety relationship includes all of the following parties, EXCEPT:
a. Surety
b. Fiduciary
c. Obligee
d. Principal - ✔✔b. Fiduciary
All of the following are recognized bond terms, EXCEPT:
a. Noncancelable (open term)
b. Definite term
c. Continuous term
d. Revolving term - ✔✔d. Revolving term
In addition to assisting bond applicants to complete applications and
indemnity agreements, some surety producers
a. Investigate commercial surety bond losses.
b. Design commercial surety bond forms.
c. Have underwriting authority to execute bonds.
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,d. Investigate applicants' credit reports, financial statements, and loss
experience. - ✔✔c. Have underwriting authority to execute bonds
A surety would use an indemnity agreement rather than a bond application
when
a. The underwriter is concerned that the surety faces a greater-than-
average risk of loss.
b. Several subsidiaries of a corporation require a number of bonds.
c. A producer with power of attorney and underwriting authority executes a
bond.
d. The surety reuqires signed indmenity agreements for all bonds. - ✔✔b.
Several subsidiaries of a corporation require a number of bonds.
An underwriter determines the surety's ability to cancel a bond and the
period of subsequent liability by
a. Reviewing the bond form and the applicable laws.
b. Reading the SAA documentation for that particular class of bonds.
c. Studying court decisions in similar bond cases.
d. None of the above determines the surety's ability to cancel or the liaiblity
period. - ✔✔a. Reviewing the bond form and the applicable laws.
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©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,In addition to the amount of the expected loss and investigative expenses,
claim representatives should consider the following when setting reserves
on commercial surety bond losses:
a. Legislative loss reserve requirements.
b. Producer commissions.
c. Obligee's financial worth.
d. Payment of interest. - ✔✔d. Payment of interest.
Which one of the following SAA classifications of license and permit bonds
do sureties consider the most hazardous?
a. Compliance bond with third-party liability
b. Reclamation and environmental protection bonds
c. Forfeiture bonds
d. Merchandising and dealer bonds - ✔✔b. Reclamation and environmental
protection bonds
When should an underwriter require collateral for license and permit
bonds?
a. When the underwriter is certain that the principal will default on the bond
obligation
b. After the principal has defaulted on the bond obligation
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, c. When the principal presents a higher-than-average risk of default on the
bond obligation
d. When the principal fails to meet all underwriting requirements - ✔✔c.
When the principal presents a higher-than-average risk of default on the
bond obligation
When might a court interpret bond language to include lawyers' fees that
exceed the bond penalty when combined with other damages (excess
awards)?
a. Courts routinely allow lawyers' fees as excess awards when bond cases
are tried.
b. Bond language prohibits courts from ever allowing excess awards.
c. Courts often allow lawyers' fees as excess awards in bond claims
presented by damaged third parties.
d. Courts sometimes allow excess awards to punish a surety for bad faith
or unfair claim settlement practices. - ✔✔d. Courts sometimes allow excess
awards to punish a surety for bad faith or unfair claim settlement practices.
Packers and Stockyards Act bonds are designed to protect
a. Livestock sellers.
b. The public.
c. Packers and stockyard operations.
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©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
